PetroChina does big gas deal with Shell

By Fu Chenghao  |   2008-11-25  |     NEWSPAPER EDITION

PetroChina Co signed an agreement with Royal Dutch Shell Plc yesterday to buy up to 40 million tons of liquefied natural gas.

China's top oil and gas producer signed a binding sales and purchase agreement with Shell to buy up to 2 million tons of LNG annually for 20 years, Shell said in a statement.

The deal was based on a heads of agreement signed in September last year, when the two parties agreed on a 20-year contract term with annual supply of only 1 million tons. The LNG will come from the Gorgon project in Western Australia, in which Shell holds a 25 percent stake, and Shell's other LNG portfolio, the Anglo-Dutch company said yesterday.

It's unknown from which terminals the LNG is destined to be dispatched. PetroChina is planning receiving terminals in Nantong, Jiangsu Province, Tangshan, Hebei Province and Dalian, Liaoning Province. The contract price was not revealed but it is estimated to worth tens of billions of US dollars.

Lim Haw Kuang, executive chairman of Shell China, said last week prices would reflect international energy prices for long-term sales and would be "good" for China. International LNG prices have surged over the past years.

Shell, along its partner in Qatar, signed a deal with PetroChina in April to supply 3 million tons of LNG annually for 25 years.